2010 World Cup Project Risks

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					Swantje Allmers and Wolfgang Maennig



         South Africa 2010: economic scope and
                         limits
Abstract: This contribution provides an ex post analysis of the economic impacts of the two most recent sin-
gle-country World Cups (WCs), Germany 2006 and France 1998. Based on macroeconomic indicators, the
experiences of these WCs appear to be in line with existing empirical research on large sporting events and
sports stadiums, which have rarely identified significant net economic benefits. Of more significance are the
novelty effects of the stadiums, and “intangible effects” such as the image effect for the host nations and the
feel-good effect for the population.

The experiences of former WCs provide a context for analysing the scope and limits for South Africa 2010.
Like previous host countries, South Africa might have to cope with difficulties such as the under-use of most
WC-stadiums in the aftermath of the tournament. On the other hand, this paper examines a handful of argu-
ments why South Africa might realise larger economic benefits than former hosts of WCs, such as the absence
of the northern-style „couch potato effect‟ and the absence of negative crowding-out effects on regular tourism.
Furthermore, the relative scarcity of sport arenas in South Africa might induce a larger positive effect than in
countries with ample provision of sports facilities. In addition, against the backdrop of continuous declines in
South African poverty since 2001, the novelty effect of new stadiums might be of special importance. Finally,
the innovative South African ambitions to use stadiums with „signature architecture‟ as a tool for urban devel-
opment or to generate external effects for the regional economy are different from former WCs.


Keywords: regional economics, sports economics, World Cup, stadium impact, feelgood factor

JEL classification: L83, R53, R58

Version: January 2008





    University of Hamburg, Faculty Econo mics and Social Sciences ,. Von-Melle-Park 5, 20146 Hamburg,
     Germany. E-mail: maennig@econ.uni-hamburg.de. Phone: +49 (0)40 42838 – 4622. Fax +49 (0)40
     42838 – 6251.
                                                                                            2




1 Introduction
Hosting a large international sporting event promises not just the excitement of the
event and media exposure for the host nation, but also the expectation of a positive re-
turn on the considerable investment associated with hosting this type of event. This is
also true for one of the largest of these events, the FIFA (Fédération Internationale de
Football Association) World Cup (WC).

Previous studies of former WCs and other large sporting events have shown only lim-
ited positive effects on local economies; this paper examines the most recent single-
country WC experiences in Germany 2006 and France 1998 and offers comparisons and
contrasts with the plans for the 2010 South African WC.



2 Assessing the economic impact of World Cup 1998 and 2006
2.1 World Cup effects on macroeconomic data

It is often heard that the economic benefits from hosting a WC stem from additional
receipts from tourism, increased turnover in retail business, and positive effects on em-
ployment. Although it cannot be denied that individual enterprises and sectors may
profit from a WC held in their own country, nation-wide analyses may indicate other-
wise, because meso- and macroeconomic data aggregate possible increases in profits
and incomes of individuals with the concurrent losses of others.


Income from international touris m

The tourism sector is usually expected to be amongst the main beneficiaries of an event
like the WC. For France 1998, some 500,000 foreign WC-tourists were expected (Szy-
manski, 2002). A study for Germany 2006 projected roughly 340,000 foreign tourists,
spending between US-$0.62 and 1.1 billion (Kurscheidt und Rahmann, 1999). The es-
timate of the German Hotel and Catering Association was even more optimistic, ca lcu-
lating up to 3.3 million foreign tourists (Unterreiner, 2006). An updated estimate for
South Africa by Grant Thornton assumes 300,000 overseas visitors, spending US-$1.36
billion (ZAR 9.3 billion) during WC 2010 (N.N., 2008a).
                                                                                                              3


As correctly implied by the cited studies, analyses of sporting events should evaluate
expenditures of non-residents as a driving force to the economy of the host nation. For
the residents of the host nation, it can be assumed that their potentially increased expen-
ditures during the sporting event is counterbalanced by reductions in their consumption
elsewhere, and that the savings rate overall remains constant, at least in the medium
term (Maennig, 1998). For this reason, domestic WC-tourism is not regarded in the first
stages of analysing the numbers of overnight stays. In a second stage, where the service
balance sheet will be examined, domestic travel (abroad) behaviour becomes relevant.


Over night s ta ys

The broken line in figure 1 illustrates the amount of overnight stays of foreigners in
Germany from 2000 to 2007. On the basis of the raw data, the figures of June 2006 ex-
ceed the figures of June 2005 by about 1 million overnight stays (+3.5%), and by some
159 thousand in July 2006 (+0.5%). However, the number of overnight stays in Ger-
many also grew an average 3.5% from 1996 to 2005 pre-WC 2006. With regard to the
trend observed for Germany as a whole, the corresponding seasonally adjusted va lues
(fig. 1 continuous line; X12 method, US Census Bureau) do not show any significant
increase that can be attributed to the WC 2006. 1

Furthermore, figure 2, which shows a comparison of seasonally adjusted overnight stays
in Germany in the years 2004 to 2006, illustrates a possible crowding-out effect that has
to be balanced against increases during June and July 2006: the WC months were im-
mediately preceded and followed by lower numbers in the months of May and August
compared to the previous years. It is conceivable that tourists who would otherwise
have travelled to Germany during May and/or August 2006 transferred their stay in a
utility- maximizing way to the WC months („time switching´). 2

France 1998 even experienced a decline in the number of foreigner overnight stays at
the time of the WC, which – using raw data - were approximately some 142 thousand
(or 1.2%) lower in June 1998 compared with June 1997. In July 1998, the decrease


1
    Regressions for the period 1/1993 to 9/2007 including a constant, a time t rend, a AR(1) term for coun-
     tervailing serial autocorrelation, and dummies for the months May to August 2006 indicated no sig-
     nificant effect of the dummies for the WC months (June and July 2006) . See tables A1a and A1b in ap-
     pendix for the results of all regressions mentioned in this contribution.
2
    The time -switching effect is not significant as well.
                                                                                                               4


amounted to 48.5 thousand (0.2%). Due to incomplete data, it was not possible to exam-
ine whether this decline, which applied to all accommodation establishments, is attrib-
utable to WC 1998. However, regression analyses following the above mentioned pat-
tern could not find any significant WC-effects on the overnight stays of foreigners in
hotels which, while declining in June and July 1998, equalled over 40% of the total
number of overnight stays of foreigners (detailed regression results in table A1b).


Effe c ts o n the s e r vic e b a la nce s hee t

To assess the tourism effect of WCs, it is also worthwhile to look at the statistics of the
service balance sheet, in which overnight stays are monetarily valued and the income
from international tourism (export of services) is contrasted with the tourist expendi-
tures abroad from people of the host nation (import of services). 3 A potential additional
inflow of foreign currency due to the WC might be counterbalanced by increased travels
abroad by locals to avoid noise, traffic jams and other turbulences that are caused by the
WC („carnival effect‟). 4 On the other hand, there may also be locals that stay at home to
experience the WC instead of travelling abroad, who, in turn, reduce domestic expendi-
ture in other countries.

In the case of Germany, the Deutsche Bundesbank reports additional income from tour-
ism at US-$ 1.7 billion5 (or rather 25.9%) from June to July 2006 in comparison with
the same period in the previous year. 6 This increase is shown in figure 3, which illus-
trates the clear rise in income from international tourism, which although starting in
May, well before the WC, was at its highest in June 2006. Despite the findings of a
gradual positive trend in German receipts from tourism that occurred anyway regardless
of the WC, 7 statistical evidence of a positive influence of WC 2006 can be found. 8 This



3
    Expenditure for acco mmodation and travel within the respective countries are included as well as the
     consumption of the non-residents.
4
    For a description of the „carnival effect‟ on the occasion of the German WC 2006 cf. Maennig (2007).
5
    Conversion on the basis of the $/€-exchange of 15 January 2008 (1.4838 $/€).
6
    The Bundesbank detects certain inaccuracies, since, for example, the additional income of local airlines
     is not included. On the other hand, ticket sales are included, which go to FIFA (Deutsche Bundesbank,
     2006).
7
    Between 1997 and 2005 the average growth in receipts from international touris m amounted to some
     5.1% per year.
8
    Regressions following the above mentioned pattern indicated a positive, significant WC-effect (for June
     2006) on the receipts fro m international tourism (period 1/ 1993 to 9/ 2007).
                                                                                                            5


increase, however, has to be contrasted with the expenditures of German tourists abroad
during June and July 2006, which were clearly above the level of the previous year as
well. On the basis of raw data, the net effect of the traditionally passive German tourism
service balance reduces to an improvement of US-$ 896 million (+18.7%) in June 2006
(corresponding to 0.03% of the German GDP in 2006) and US-$ 125 million (+2.0%) in
July 2006, which is statistically insignificant.

France 1998 registered increased receipts from international tourism of some US-$795
million in the second and US-$825 million in the third quarter compared to the previous
year (raw data). 9 A concurrent increase of the travel expenditures by French tourists in
other nations led to a net effect on the French tourism service balance that was only
about US-$303 million (+7.1%) in the second and US-$277 million (+5.7%) in the third
quarter of 1998. Thus, no significant WC effects can be isolated for the WC 1998. 10

To sum up, the effects for the tourism sector, which is usually expected to be amongst
the main beneficiaries of such mega-events are small, mostly negligible. Mega-events
such as the WC may displace regular tourism from abroad and/ or lead to the „carnival
effect‟. Tourists who are less WC-enthusiastic might postpone a planned trip to the host
nation or even cancel it just because of this event. Common motives are the avoidance
of noise and traffic jams, the fear of rising prices or concerns regarding security 11 (ana-
logue to the „carnival effect‟ that leads to increased trips abroad from locals). In addi-
tion, any positive effects in WC months should be checked for a „time-switching‟ effect.


Effects on retail sales

The retail industry usually hopes for positive effects from hosting a WC due to the ex-
pectation of increased foreign and domestic consumption.




9
    The service balance sheet data for France have only been available as quarterly figures.
10
     Regressions for the period Q1/1994 to Q2/ 2007 that include dummies for the WC quarters of 1998,
     dummies for the quarter before and after the tournament, a constant, a time trend variable, and an
     AR(1)term as exp lanatory variables, did not indicate any significant WC-effects on the income fro m
     international touris m, the expenditure for international touris m and the tourism service balance.
11
     On the central role of fighting crime on the occasion of the WC 2010 see Swart (2006).
                                                                                                                 6


The latter argument is theoretically problematic at the outset. Even if individual enter-
prises and sectors may profit from a WC 12 , it has to be assumed that this will be com-
pensated for by reduced demand in other months and/or for other goods, as long as the
national savings rate remains constant. Analyses of the consumption expenditure of pri-
vate households in France and Germany support this view, indicating no significant
effects of the WCs in 1998 and 2006. (table A1a and b)

Furthermore, examination of the deflated monthly retail sales index does not show any
significant impact of WCs, neither for France nor for Germany. 13 Figure 4 represents
the percent change in retail sales figures compared with the same months of the previ-
ous year for the German example, and reveals that the WC months of June and July
2006 were actually characterized by decreases in turnover. This negative impact of the
WC on retail sales– though statistically not significant - could be referred as the „couch
potato effect‟: consumers might have been diverted from their normal consumption be-
haviour by the WC itself, the matches in the stadiums, or the „Fan-Mile‟ street markets.
Or they might have chosen to entertain themselves at home by watching the live broad-
casts of the soccer and restricting themselves to the consumption of fast food (Maennig
and Du Plessis, 2007a).


Employme nt effects

Citing expected increases in tourism and retail trade, ex ante studies regularly predict
growing employment figures as a consequence of major sporting events. The creation of
some 350,000 jobs through WC 2002 had been predicted by the Korean Development
Institute (Finer, 2002). A survey undertaken by the Deutscher Industrie- und Handels-
kammertag (German Association of Chambers of Industry and Commerce) projected
60,000 new jobs from WC 2006 (DIHT, 2006). Regarding WC 2010, Grant Thornton
(2004) assumes that the equivalent of 196,400 annual jobs will be created and sustained
through the expenditures of foreign visitors, and that the equivalent of 368,250 annual




12
     In the case of the WC 2006 businesses as beer breweries (N.N., 2006a), producers of soccer merchan-
     dising and tabletop soccer (Ritter, 2006) and transport enterprises as the national railway co mpany
     Deutsche Bahn (N.N., 2006b) reported positive effects for examp le.
13
     It has to be considered that these numbers do not include possible increases in sales at filling stations
     and in the “Fanfests”.
                                                                                                                     7


jobs will be sustained between 2006 and 2010 as a consequence of WC-related con-
struction activities (N.N., 2008a).

During both WCs 1998 and 2006, France and Germany experienced an increase in em-
ployment figures at the time of the tournament: the (seasonally adjusted) mean number
of employees in Germany rose in June 2006 by 323 thousand employees (equivalent to
0.83%) compared to the previous year. The increase in July 2006 amounted to 352
thousand employees (0.91%). France registered in the second quarter of 1998 a mean
employment that was some 425 thousand employees (or 3.11%) higher than in the pre-
ceding year and the boost in the third quarter was about 420 thousand employees
(3.06%). 14 Here, too, such developments have to take into account a general employ-
ment trend, which had been positive in both nations in the WC years. The mean em-
ployment in France 1998 rose by some 1.1%, and in Germany 2006 by about 1.98%
compared to the previous years; throughout 1998 and 2006 respectively, the employ-
ment figures exceeded the values of the corresponding months/quarters of the year be-
fore. Hence, statistical evidence of significant emplo yment effects is hard to find for
both WCs.15

Altogether, it must be taken as an interim result that most of the effects on tourism, re-
tail sales and employment that feature in the foreground of discussions about the eco-
nomics of WCs turn out, at least in the short term, to be substantially smaller than pre-
viously supposed. 16 This sober view regarding short-term economic effects on income
and employment is confirmed by further econometric studies of WCs 17 as well as by
studies that attend to other major sporting events. Whether positive effects from hosting




14
     The numbers of employees in France have only been available as quarterly figures and are seasona lly
     adjusted as well.
15
     Regressions performed on the above mentioned samples yielded no significant values for the WC
     dummies for the period 1/ 1993 to 9/2007 (Germany) and Q1/1993 to Q3/2007 respectively (France).
     Moreover, no significant effects of the examined WCs on the monthly unemployment rates were
     found. A negative (!) effect on the accu mulated wages in France in the first and second quarter in 1998
     was detected. For details see table A1a and b.
16
     Notwithstanding, it should be borne in mind that insignificant results could simp ly be due to the fact
     that in spite of all the media attention they attract, the sporting events are ju st too small in co mparison
     to the large, diverse economy within which they take place (Szy manski, 2002:177). This applies pa r-
     ticularly when they are considered against the background of the relatively high level of variance of
     economic t ime series that lead to increased significance demands.
17
     Cf. Baade und Matheson (2004) for the WC 1994 in the USA and Hagn and Maennig (2008a, b) ex-
     amining the WCs 1974 and 2006 in Germany.
                                                                                                                8


mega-events like the WC can be seen in the medium- or long-term seems unclear as
well. 18

2.2 World Cup stadiums, novelty effect, and urban development

For Germany 2006 the expenditures on the WC-stadiums (of which four were newly
built) reached more than US-$2 billion (Feddersen et al., 2006). 19 In contrast, France
spent less than US-$500 million by restricting their construction works mainly to the
reconstruction of existing stadiums, and by building only one new stadium (Stade de
France) (Szymanski, 2002). 20

From an economic point of view, it has to be emphasized that these expenditures should
not be equated with WC costs. If the stadiums remain in use after the WC, or would
have been built or renovated without the occurrence of the WC, the WC-related costs
for stadiums should be understood as the consumption of resources in the form of losses
in the value of the stadiums due to the tournament, usually described as depreciations in
cost calculations. With regard to the amount of these costs, it can be noted that stad iums
renovated or constructed for the WC 1974 in Germany did not fulfil the needs of the
soccer clubs some 30 years later. Under the assumption of linear depreciation, the costs
are some 3.3% p.a. of the investment expenditures. This equals some 0.6% of WC-
derived stadium costs on the basis of 10 weeks of exclusive use of the stadiums for the
WC, including the periods of pre- and post- match operations. In the case of Germany
2006, these costs amount to US-$12 million, and should have been fully covered by the
2006 WC budget. 21 A similar argument applies to transportation infrastructure if it was




18
     For a comprehensive overview of emp irical studies assessing the (short -, mediu m and long-term) ef-
     fects of WCs and other comparable events, see table A2 in appendix. The only long-term study on the
     effects of a sporting mega event finds positive evidence; see Jasmand and Maennig (2008) on the
     Oly mp ic Games 1972 in Munich.
19
     More than 60% of the expenditure of the 12 W C 2006 stadia was financed by the clubs and other pri-
     vate investors. In addition, investments in the related infrastructure amounted to nearly US-$3 b illion
     (Maennig and Buettner, 2007), despite the fact that the infrastructure that is relevant for large-scale
     sporting events (motorways and motorway junctions, railway platforms, car parks) already existed to a
     relatively high degree in Germany.
20
     For the 2002 W C, South Korea spent nearly US-$ 2 b illion, and Japan at least US-$ 4 billion for the
     stadia (Baade and Matheson, 2004: 345).
21
     The organizing committee assigned about US-$ 2.2 million (€ 1.5 million) to each stadium operator
     (DFB, 2006). In addit ion, each city received about US-$ 450,000 (€ 300,000) fro m the budget of the
     organizing committee, which, however, could not cover the city‟s costs for insurance, decorations,
     places for warming up, etc.
                                                                                                              9


built in a sustainable way, i.e. provided benefits in connection with future uses of the
stadiums.

If the stadium constructions and their expenditures cannot be charged to the WC in full,
then this applies for the long-term benefits of the stadiums as well. This being said, it
should be pointed out that new stadium structures or modernisations consistently en-
gender a novelty effect: curiosity, but also the increase in comfort, improved view, and
better atmosphere in new or renovated stadiums regularly lead to significantly higher
spectator figures for the clubs, at least for a period after these improvements. 22 In Ger-
many, multivariate studies on all stadium-projects since 1963 regarding construction-
and reconstruction isolated a rise in spectator numbers of about 2,700, or some 10% per
match (Feddersen et al., 2006). In select soccer stadiums, the novelty effect can even
turn out to be markedly greater. The novelty value, which measures the additional re-
ceipts of the clubs or rather operators, can, in fact, be larger than the increase in atten-
dance due to higher average price levels as a result of regularly expanded VIP and busi-
ness seat areas. In addition, there are increased naming rights income, and income from
other events which could not take place in less modern and prestigious stadiums.

While the direct economic impact of hosting such events has often been muted as dis-
cussed above, there is potential for exploiting the opportunity offered by large sporting
events to create an architectural legacy via ambitious stadium architecture with lasting
external effects for the regional economy. 23 Success in this regard is often associated
with so-called „iconic‟ buildings. A clear definition of iconic buildings does not yet ex-
ist, but consideration of examples of this kind of building (e.g. the Sydney Opera
House, the Guggenheim Museum in Bilbao, the Centre Pompidou in Paris, the Munich
Olympic Stadium) do reveal certain common design characteristics: they display an
architecture that, at least at the time of planning, was regarded as highly innovative,
often apparently impractical and non-functional, but which was nevertheless unique and
striking. The planning is often so unconventional that citizens unite in their resistance to
it, resistance which, however, gradually gives way to a feeling of regional pride, inspira-
tion and identification. In every case, the innovative design helped the building to suc-


22
     Cf. e.g. Noll, 1974; Coffin, 1996; Qu irk and Fort, 1992; Kahane and Shmanske, 1997; Clapp and
     Hakes, 2005 fo r the USA.
23
     Cf. Maennig (2006). For an econometric analysis of the effects of sport arenas on the regional economy
     see Tu (2005) and Ahlfeldt and Maennig (2007a, b).
                                                                                                               10


ceed in becoming a landmark and part of the memorable character of their cities, which,
in turn, succeed in „getting their name on the world map‟, i.e. achieving the desired im-
age effects (Maennig and Schwarthoff, 2006). Iconic buildings provide an aesthetic fo-
cal point for a city and could become a springboard for other urban developments and
recreational facilities, which are, in turn, attractive for locals as well as international
tourists.

Despite the accepted impact of iconic architecture (also referred to as „signature archi-
tecture‟) the opportunity to aim for not only an optimization of the management effi-
ciencies of professional sport clubs, but also for a particularly attractive, spectacular,
iconic stadium to benefit each city, has been widely missed in recent stadium-projects.
The architecture of the German WC-stadiums, while it is freely noted that many techni-
cal innovations and creative architectural ideas are bound up in the stadiums, overall,
can be at best described as “functional”. Germany 2006 did not generate unique new
constructions and iconic architectural features with trans-regional significance, with the
possible exception of the Munich Allianz Arena. It, however, was situated too far from
the city centre to generate a positive effect for Munich in the foreseeable future. 24 The
evaluation of the French WC-stadiums is similar.

However, the “functional” design of stadiums should not be attributed to European club
managers. They have the task of maximizing the income for their teams. For this, they
must confine their endeavours to whatever is necessary to keep fans content. It is not
their business to participate in municipal or regional politics, to make their architecture
interesting from the point of view of the cityscape, or to achieve external effects for the
regional economy, from which their budgets do not profit. Responsibility is left to the
local authorities and their policy makers, who have to bear the additional costs of ambi-
tious architecture (and, where applicable, better location). An increased level of positive
economic effects emanating from stadiums thus in some cases, requires public funding.

2.3 International perception and feelgood effects for residents

Hosting a major sporting event like the WC might also be associated with effects that
are often presumed either to be hardly measurable, or “intangible”. Thus, WCs are regu-



24
     For the role of the (central) location of stadiums on city development, see particularly Ne lson (2001,
     2002) and Santo (2005).
                                                                                                          11


larly regarded as a possibility for self- marketing and image-building, which are ex-
pected to produce lasting improvements for the host nation‟s competitive environment.
The successful execution of a mega-event provides the opportunity to demonstrate or-
ganisational and technological know-how, and to showcase the hospitality and the
beauty of the country.

One possibility for assessing such image-effects is provided by the „Anholt Nation
Brands Index‟ (NBI), which evaluates the nation‟s brand image of developed and de-
veloping countries. Nations are classified quarterly in a worldwide poll regarding their
cultural, political, commercial and human assets, investment potential and tourist ap-
peal. The results are combined to produce an aggregate ranking. The NBI, which was
started in 2005, shows a clear rise in the international perception of Germany as a result
of the WC. The erstwhile image abroad of Germany as „hard and cold ... not a nation
much associated with warmth, hospitality, beauty, culture, or fun‟ (Anholt and GMI,
2006) was improved through the WC in all criteria that constitute the NBI. The greatest
increase in approval was scored by the statement or question „This country excels in
sport‟. Figure 5 shows the trends in selected questions that were presented with a scale
of 6 (very good, complete agreement) to 1 (poor, no agreement).

Such results demonstrate the opportunity of image gains through hosting a major sport-
ing event. 25 The impact of WCs on the image of their hosts might heavily depend on the
quality of their presentations in public as likeable, hospitably, progressive and as a ca-
pable (business) location. Various factors such as smooth operations during the event,
the granting of security, and appropriate PR- and marketing-activities (Maennig and
Porsche, 2008) will thereby influence the image-effects of subsequent WCs.

The „non-use effect‟ also has to be considered: the benefit for the host countries‟ popu-
lations of the event taking place in their neighbourhood, even if they themselves do not
visit the stadium. Reasons for benefits without experiencing the tournament in the stadi-
ums might be, among others, the free and relaxed atmosphere during the WC, or in-
creased topics of conversation. 26 Quantitative ex ante preliminary and ex post studies on
large sporting events mentioned so far have often neglected the value of this effect, also


25
     Due to the available data, it was not possible to test statistical significance.
26
     The magnitude of this effect might be strongly influenced by the „public viewing‟ in the fan-parks
     which makes the expression “non-use” questionable.
                                                                                                                    12


called the „feelgood effect‟. Only a few studies attempt, through a survey of payment
reserves (willingness to pay), to evaluate this phenomenon of benefiting from (sporting)
events without active attendance at the stadium. 27 Nevertheless the results of a corre-
sponding study regarding the WC 2006 show that this effect can have great signifi-
cance: Heyne et al. (2007) determine that before the WC 2006, only one out of five
Germans had a positive willingness to pay (WTP) for the WC to take place in Germany.
On average, the WTP was US-$6.32 (€ 4.26) per person, which, with 82 million inhabi-
tants, corresponds to some US-$518 million. After the WC, 42.6% of Germans had a
positive WTP, and the average was US-$15.88 (€ 10.07), amounting to US-$1.3 billion
for the whole country. 28 Since only a few of the 82 million Germans themselves had
tickets to attend a stadium for a WC match, the willingness to pay can be interpreted as
a „non- use effect‟. This “intangible” effect is this amongst the most significant eco-
nomic effects of the WC 2006.29

To sum up, for a more thorough evaluation of the effects arising from WCs (and other
major sporting events), more consideration should be given to the likelihood of (meas-
urable) effects that are frequently given less attention in descriptions of WC-effects,
such as the novelty effect and possible externalities of stadiums, the public image effect
for the host nations and the feelgood effect amongst the residents.

3 South Africa 2010 – additional challenges and chances
There is no doubt that analyses of former WCs and other major sporting events provide
a context for estimating the potential risks and benefits for South Africa 2010. However,
European structures differ from South Africa‟s, which suggests that South Africa might
have to cope with additional difficulties in some areas, but also might experience larger
economic benefits in other fields through hosting the FIFA WC 2010.



27
     Johnson and Whitehead (2000) study the willingness of people to pay for two stadium projects in Le x-
     ington, Kentucky, even if they do not visit the stadiums. Atkinson et al. (2006) evaluate the British
     WTP for the Oly mp ic Games in London 2012.
28
     Heyne et al. (2007) report that the increase in the willingness to pay is attributable above all to a change
     of attitude in those who, before the WC, were not willing to pay. After the WC, an increased willin g-
     ness to pay was expressed particularly among East Germans, but also among low-skilled persons.
     Heyne et al. conclude that major sporting events have a characteristic „experience value‟; consumers
     cannot correctly estimate the quality of an event before their first experience of it, and hence, cannot
     predict their willingness to pay for it.
29
     Although this might induce South African attempts to quantify the feel-good effect by ex ante polls,
     one should bear in mind that ex ante WTP might be substantially biased downward.
                                                                                                                13


3.1 Additional challenges for South Africa

To start with, it has to be mentioned that South Africa plans to invest heavily to host the
WC 2010. Ten stadiums are planned in nine host cities, all of which possess the mini-
mum capacity of 40,000 spectators as required by the World Soccer Association FIFA.
Five stadiums (Soccer City and Ellis Park in Johannesburg, Royal Bafokeng in Ruste n-
berg, Loftus Versfeld in Pretoria and Free State in Bloemfontein) will be adapted to
FIFA‟s quality requirements via modernisation measures. Another five stadiums (Cape
Town, Durban, Nelspruit, Polokwane, Port Elizabeth) will be newly built. The informa-
tion in table 1 indicates a total investment of US-$ 1.38 billion on stadiums for which
the government is almost exclusively accountable, based on presently available infor-
mation. 30 This (public) expenditure stands in contrast to potentially only moderate pos-
sibilities for post-tournament usage of the new large stadiums. 31 The exceptions are
Ellis Park in Johannesburg and Loftus Versfeld in Pretoria, both of which are home to
some of the largest soccer soccerand rugby teams. The future of the new stadium in
Cape Town remains unclear if the provincial rugby team is unwilling to relocate from
their present venue at Newlands. Under these circumstances, it is understandable that
there is hardly any private financing for the WC-stadiums in South Africa, and that they
would not have been built without the WC tournament. 32 In this case, the investment




30
     This is sharply higher than the US-$ 112 million that the South African delegation budgeted for sta-
     dium investment at the time of the tournament bid (i.e. d uring 2004) (FIFA, 2004: 65) and is much
     closer to most of the experiences in relation to former WCs. Cf. Maennig and Du Plessis (2007a) for a
     survey of the change in the budgeted amount for investment in stadia and related infrastructure that has
     been substantially increased by the South African government since 2004.
31
     Although there is considerable local interest in soccer, the attendance at soccer matches, even in the
     first league, is comparatively lo w at around 5,000 on average. In the German Bundesliga, average at-
     tendance during the 2006/07 season was 40,000 per match (N.N., 2008b) and in the French Ligue 1,
     this value 20,500 per match (N.N., 2008c). Ho wever, it should be noted that the underuse of new fa-
     cilities is a reality for the 20 stadia built for the WC 2002 in South Korea and Japan, which today are
     mainly used for informal markets and such, because there is little use for them by the Japanese and the
     Korean premier leagues, see Finer (2002), Unterreiner (2006) and Horne (2004).
32
     A recent, though modest, exception is the US-$ 27.1 million (ZAR 185 million) finance package pro-
     vided by the South African investment bank Investec to meet the shortfall in the City of Cape Town‟s
     budget for the new Green Point stadium ( Van der Westhuizen, 2007). Conversion on the basis of the
     ZAR/$-exchange of 15 January 2008 (6.81554 ZA R/$).
                                                                                                                    14


expenditure is equal or at least similar to investment costs, leading to problematic bene-
fit/cost ratios. 33

A factor that might raise the costs of hosting the WC in South Africa unexpectedly is
the current state of their business cycle and property market. The South African eco n-
omy is presently experiencing its longest post-War expansion, but in recent months,
imbalances both domestically (large and rising household debt) and externally (a large
current account deficit) have grown more acute, and policy makers at the South African
Reserve Bank have begun tightening monetary policy. Furthermore, the result of this
long upswing and the associated property boom is that building costs have risen sharply
(cf. Funke et al., 2006; Pabst, 2007). Under these circumstances, there are realistic con-
cerns about the ability of the local construction industry to manage the co nstruction, or
rather the completion, of the stadiums, the Gautrain, the King Shaka airport in Durban,
and the De Hoop Dam (Capazorio, 2006; bfai, 2007a, b).

Two other conditions that are also likely to cause particular problems in South Africa
where the economy is currently growing at a rate of five percent per year: during the
entire period of the tournament, no construction work is permitted in the host cities. In
addition, the cities have to provide reserve capacity for electricity generation to co m-
pensate for any capacity shortfalls, a recurring problem in South Africa (N.N., 2008d).34

Additional chances for South Africa

South Africa faces not only additional difficulties due to the prevailing conditions in
this nation, but also extra benefits in other areas (Maennig and Du Plessis 2007).

First, the „couch potato effect‟ mentioned in section 2.1 is less likely to occur in South
Africa. Due to different hospitality and „going out‟ behaviours of soccer fans in South
Africa, spending might be higher instead of lower if they stayed at home and invited
friends to watch TV together. This may lead to a positive impetus on the local econo-




33
     However, it should be emphasized that at least some of the South African stadium-projects are likely to
     create lasting external effects for the regional economy, leading to better benefit/cost ratios in the long-
     term (cf. section 3.2). The almost exclusive usage of public funds will probably have allowed for the
     consideration of urban planning aspects to this extent. Moreover Sturgess and Brady (2006) point out
     the possibility of a general rise in the popularity of soccer as a consequence of hosting a WC.
34
     The additional consumption of electricity by the stadia, media centers , and hospitality areas was calcu-
     lated at about 13 million KW for the WC 2006, Bundesminister des Inneren (2006: 15).
                                                                                              15


mies such as retail business and the hotel and catering industry, which might induce
employment effects as well, at least in the short term.

Second, the usual negative crowding-out effect on regular tourism of large sporting
events referred to in section 2.1 might not occur because the WC happens during the
low season for tourism in South Africa. This raises potentials for additional receipts
from tourism and employment-effects in the tourism- and leisure- industry not only in
the short-term, but also for the long-term to the extent that the country succeeds in pre-
senting itself as an attractive tourist destination for future trips. Moreover, WC-tourists
are likely to stay longer in South Africa (i.e. spend more) due to the long distance they
had to overcome for the tournament in most cases. 35

Third, most of the econometric studies on sporting events and sport facilities (for an
overview see table A2) are related to the USA and European countries, which enjoy
ample provision of sports facilities. In Germany, for example, there are 127,000 sports
venues, including 400 multi-purpose sports halls with spectator capacities of at least
3,000. Given that sports venues are also subject to the law of diminishing returns, low-
level returns are to be expected at most. For countries such as South Africa that do not
have a comparably dense provision of sporting facilities at their disposal, unsatisfac tory
economic consequences may not directly apply.

Fourth, although at present, only a few South African sporting events apart from rugby
are capable of drawing maximum capacity crowds, this will presumably change in fu-
ture. The South African economy is enjoying its longest post-War upswing and poverty
indices have shown a rapid decline in poverty. For example, the headcount poverty rate
declined from 51.4% in 2001 to 43.2% in 2006, while mean incomes of the poorest 20%
of society increased on average about 7.2% p.a. during this period. Furthermore, there is
evidence for a reduction in the depth and severity of poverty (Republic of South Africa,
2007: 23 et sqq.). Higher incomes for poor South Africans are auspicious for WC re-
lated activities, as the majority of the country‟s soccer fans are poor.

Finally, it has to be considered that the sport venues built or reconstructed for past WCs
hardly stimulated any positive effects to the regional economy because they were not
                                                                                                             16


built with this aim in mind. The aim during planning was usually to maximise the profit
margins of the professional clubs, rather than urban development. 36 In South Africa,
there is evidence that the WC might be used as a vehicle to attempt to induce positive
urban economic effects: The new King Senzangakhona Stadium in Durban is being de-
signed as an „iconic‟ building with a 30 storey arch stretching its entire length (SAPA,
2006; Jones, 2006a). The relevant design is not limited to the stadium itself, but is e m-
bedded in a design concept for the entire urban region, thus ensuring that the stadium
positively affects Durban‟s economic viability. Not just in Durban, but also in other host
cities of the next WC, the architectural plans (published so far) do indeed seem different
from the functional stadium projects of former WCs (Maennig and Schwarthoff 2006).37
As elsewhere, though, there is some resistance to „signature´ projects: the residents of
Greenpoint in Cape Town are evidently less willing to tolerate, much less to pay for, an
iconic stadium. Indeed, pressure from local residents has already resulted in an instruc-
tion to the architects to “moderate” their design for the new stadium (Schaug, 2006). In
this regard, it is desirable that some of the South African host cities which are large,
dynamic, and important– but not yet internationally prominent – succeed in „getting
their name on the world map‟. In conjunction with the South African stadium-projects,
it should also be emphasized, that despite the public presence of a formal list of criteria
used to determine the host cities and venues in South Africa, important criteria seem to
have been the existing infrastructure (stadiums, transportation and tourist facilities) in
major metropolitan areas, the geographical spread of stadiums across the nine provinces
of South Africa and the goal of encouraging economic activity in underdeveloped rural
areas in response to the large gap between urban and rural incomes and wealth in South
Africa (Maennig and Du Plessis, 2007b).



4 Conclusion
The analyses of the WCs held in France in 1998 and in Germany in 2006 agree with
former empirical findings on the effects of large sporting events, namely that hardly any



35
     For the WC 2006 in Germany, an average sojourn time of around 10 days had been assumed for fo reign
     WC-tourists (Kurscheidt and Rahmann, 1999; Madeja, 2005). Ex ante estimates for the WC 2010 ca l-
     culate with a mean length of stay of 15 days of visitors fro m abroad (Grant Thornton, 2004).
36
     It should once again be emphasised that the club managers bear less responsibility for these develop-
     ments than the local authority decision-makers.
                                                                                                   17


WCs and comparable events have positive impacts on tourism, employment and in-
come. Nevertheless, we are less sceptical than other academics about the beneficial im-
pact of South Africa 2010 based on five arguments. First, the „couch potato effect‟
which diverts WC-addicted consumers from their normal consumption behaviours is
less likely to occur in South Africa. Second, the usual negative crowding-out effect on
regular tourism of large sporting events might not have its usual magnitude because the
WC will happen during the low season for tourism in South Africa. Third, South Africa
does not have a comparably dense provision of sporting facilities as North American or
European countries. Fourth, South African stadium projects draw on the insights from
urban economics with the aim of a more effective integration of stadiums with urban
needs, which hold the promise of enhanced positive externalities. As was true for for-
mer WCs, South Africa may improve its international perception which in the long term
may generate increased numbers of private and conference tourists, as well as attract
external investors (Jasmand and Maennig, 2007). This effect might be much stronger
for South Africa than for former WC organising countries like the USA, Japan/ Korea,
France or Germany if South Africa is able to run the event smoothly and to main-
tain.security.- Given all this, fifth, the event benefit or feelgood utility might reach new
record levels in soccer-addicted South Africa.




37
     See figures 6 to 8 for views of the planned stadia in Durban, Port Elizabeth and Cape Town.
              Tab. 1            Stadium investments for the FIFA 2010 World Cup in South Africa
 City                                                                   Expenditure (US$ millions)    Capacity season 2010                                                                      Inhabitants (2004)
                                                                                          New Stadiums
 Cape Town                                                                       403.1a,b                        68,000c                                                                                          2,984,885
 Durban                                                                            278d                          70,000e                                                                                          3,129,298
 Nelspruit                                                                        118.8f                         43,500g                                                                                            484,245
 Polokwane                                                                       111.2h,i                       45,000 h,i                                                                                          532,673
 Port Elizabeth                                                                   159.9j                         40,000j                                                                                          1,054,359
                                                                                         Upgraded Stadiums
 Bloemfontein                                                                      34.1k                         48,000l                                                                                            655,332
 Johannesburg: Ellis Park                                                         29.2m                         65,000m                                                                                           3,225,407
 Johannesburg: Soccer City                                                        208.5n                        94,700n
 Pretoria                                                                         25.7o                         55,000o                                                                                              1,531954
 Rustenburg                                                                       20.4p                         45,000p                                                                                               405,554
 Total                                                                           1388.9                         574,200



Taken fro m: Maennig and Du Plessis (2007).
Sources: a Van der Westhuizen (2007), b Webb (2007), c Yeld (2006), d West (2007), eJones (2006b),
             f
              Mang xamba (2006), g Africa (2006), h Polokwane Municipality (2006), i Louw (2006),
             j
               Matavire (2007), k Dlodlo (2007), l Daily Dispatch (2007), mSeale (2007), n Co kayne (2007),
             o
               Received via email fro m the LOC Tshwane, p SABC News, 21 February 2007,
             http://www.sabcnews.com/sport/soccer/0,2172,144155,00.ht ml accessed on 4 April 2007.




       Fig. 1                   Overnight stays in Germany since 2000
                     40000000

                     35000000

                     30000000
   Overnight stays




                     25000000
                                                                                                                                                                                                    Raw data
                     20000000                                                                                                                                                                       Seasonally adjusted data
                     15000000

                     10000000

                     5000000

                           0
                                01/2000

                                          07/2000

                                                    01/2001

                                                              07/2001



                                                                                  07/2002



                                                                                                      07/2003

                                                                                                                01/2004

                                                                                                                          07/2004




                                                                                                                                                        01/2006

                                                                                                                                                                  07/2006

                                                                                                                                                                            01/2007

                                                                                                                                                                                      07/2007
                                                                        01/2002



                                                                                            01/2003




                                                                                                                                    01/2005

                                                                                                                                              07/2005




Data orig in: Eurostat: Nights spent by non-residents - monthly data, Hotels and similar establishments,
              Other collective acco mmodation establishments, Total; retrieved 14 December 2007.
                                                                                                                                                                                                  19


   Fig. 2                                                                            Overnight stays in Germany in the years 2004 to 2006

                                           27000000

   Overnight stays (seasonally adjusted)
                                           26500000
                                           26000000
                                           25500000
                                           25000000
                                           24500000                                                                                                                                        2004

                                           24000000                                                                                                                                        2005
                                           23500000                                                                                                                                        2006
                                           23000000
                                           22500000
                                           22000000
                                                                                                   Feb




                                                                                                                                                    Sep

                                                                                                                                                                Oct
                                                                                                                  Apr




                                                                                                                                     Jul
                                                                                                                              Jun



                                                                                                                                            Aug
                                                                                                           Mar




                                                                                                                                                                                    Dec
                                                                                                                                                                            Nov
                                                                                           Jan




                                                                                                                        May
Data orig in: Eurostat: Nights spent by non-residents - monthly data, Hotels and similar establishments,
              Other collective acco mmodation establishments, Total; retrieved 14 December 2007.

   Fig. 3                                                                            Touris m receipts in Germany

                                                                                    4500
                                           Receipts from international tourism in
                                             million US-$ (seasonally adjusted)




                                                                                    4000


                                                                                    3500
                                                                                                                                                                                          2004

                                                                                    3000                                                                                                  2005
                                                                                                                                                                                          2006
                                                                                    2500


                                                                                    2000
                                                                                                                                                          Oct
                                                                                                                                           Aug




                                                                                                                                                                              Dec
                                                                                             Jan




                                                                                                                                                                      Nov
                                                                                                                        May
                                                                                                     Feb




                                                                                                                                                  Sep
                                                                                                                  Apr




                                                                                                                                    Jul
                                                                                                                              Jun
                                                                                                            Mar




Data orig in: Deutsche Bundesbank: Zeitreihen Datenbank: Dienstleistungsverkehr mit dem Ausland,
              retrieved fro m <http://www.bundesbank.de/statistik/statistik_zeitreihen.php?func
              =list&tr=www_s201_b02> on 14 December 2007.
                                                                                                                                                                                                                                                                                   20


            Fig. 4                                         Percent change in retail sales in Germany

                                               6,00%
  Percent change in retail sales (seasonally
  adjusted) comp. with the previous year       4,00%

                                               2,00%

                                               0,00%

                                               -2,00%

                                               -4,00%

                                               -6,00%
                                                            01/2005



                                                                                        05/2005



                                                                                                                  09/2005

                                                                                                                            11/2005



                                                                                                                                                                03/2006



                                                                                                                                                                                        07/2006

                                                                                                                                                                                                   09/2006

                                                                                                                                                                                                             11/2006

                                                                                                                                                                                                                       01/2007



                                                                                                                                                                                                                                           05/2007



                                                                                                                                                                                                                                                               09/2007

                                                                                                                                                                                                                                                                         11/2007
                                                                            03/2005



                                                                                                     07/2005




                                                                                                                                                      01/2006



                                                                                                                                                                              05/2006




                                                                                                                                                                                                                                 03/2007



                                                                                                                                                                                                                                                     07/2007
Data origin : Eu rostat: Retail trade, except of motor vehicles, motorcycles and trade at fil ling stations,
              retrieved 18 January 2008.

            Fig. 5                                         Inte rnational perception of Ge rmany

 5,4
 5,2
             5
 4,8                                                                                                                                                                                              2005
 4,6                                                                                                                                                                                              2006
 4,4
 4,2
             4
                                                            Rich cultural




                                                                                                               Welcome
                                                                                      contemporary
                                               excels at




                                                                                                                                      Close friends


                                                                                                                                                                 Visit if money
                                                              heritage




                                                                                                                                                                   no object
                                                sport




                                                                                         culture




Source: Wave 3/ 2005 and 3/ 2006 GM I-Anholt Nat ions Brand Index
                                                              21


   Fig. 6       King Senzangakhona Stadium - Durban




Source: Monnerjahn (2006).

   Fig. 7       Nelson Mandela Bay Stadium - Port Elizabeth




Source: N.N., 2008e .

   Fig. 8       Greenpoint Stadium – Cape Town




Source: N.N., 2008f.
                                                                                                                                                  22



Appendix
Tab. A1 a)               Regression results for Germany 2006
                                                                                                                                        Adj. R2
Indicator               Constant        Trend           May 2006        June 2006      July 2006       August 2006       AR(1)

Overnight stays         18997186***     31188.73***     -785171.2       -350895.8      -315721.0       -914851.2         0.850428***    0.809675
(total)                 (17.61264)      (3.101197)      (-0.832531)     (-0.306210)    (-0.275513)     (-0.970019)       (22.19700)
Overnight stays         11590403***     14331.89***     -256864.2       -564043.9      -308397.2       -467339.0         0.678265***    0.869261
(hotels)                (81.71898)      (10.45120)      (-0.876356)     (-1.634529)    (-0.893690)     (-1.594427)       (12.01820)
Tourism receipts        2499.815***     -1.388046       234.5335        686.6421***    82.29714        -23.30944         0.880086***    0.784282
(million €)             (3.465890)      (-0.697925)     (1.540278)      (3.700421)     (0.443514)      (-0.153084)       (23.74302)
Tourism expendi-        12047.52***     -17.43161***    -51.41688       -135.3734      -89.12482       -1003.040**       0.892961***    0.890547
ture (million €)        (5.625940)      (-2.963072)     (-0.128126)     (-0.276528)    (-0.182056)     (-2.499475)       (25.95640)
Tourism service         -9449.868***    15.91495***     218.5518        591.4344       122.3346        708.0810*         0.776757***    0.839132
balance (million €)     (-9.435874)     (5.704452)      (0.532124)      (1.197678)     (0.247727)      (1.723943)        (16.17854)
Retail sales index      97.97954***     0.017273***     4.233697**      1.185867       -0.020461       2.107653                         0.150722
(deflated)              (269.4771)      (4.653059)      (2.079154)      (0.582257)     (-0.010044)     (1.034420)
Employment (in          33506.99***     27.36336*       43.49724        68.55073       64.51089        37.97352          0.989824***    0.996119
thousands)              (7.191079)      (1.810372)      (1.023186)      (1.316572)     (1.238985)      (0.893254)        (106.3342)
Unemployment rate       44.13698        -0.110832       -0.140756       -0.181135      -0.221137       -0.060759         0.994240***    0.972098
                        (0.341367)      (-0.403788)     (-1.164243)     (-1.222883)    (-1.492947)     (-0.502563)       (72.11161)
                                                                                                                         AR(1)          Adj. R2
Indicator               Constant        Trend           Q1/2006         Q2/2006        Q3/2006         Q4/2006

Wages (accumu-          242740.2***     799.1710***     -184.4707       -228.6385      -531.1471       -2301.251         0.917903***    0.974437
lated) (million €)      17.53209        3.179061        -0.091870       -0.092966      -0.216061       -1.147059         15.51840
Consumption priv.        279976.7***     364.6284      3526.899*      2036.274       2308.018       3933.037*        0.914054*** 0.964283
households. (const.      (13.91678)      (1.059772)    (1.744105)     (0.824041)     (0.933996)     (1.944889)       (14.92133)
prices) (million €)
                          *                                     **                                    ***
t-satistics in parenthese. =significant on 10%-confidence level, = significant on 5%-confidence level, = significant on 1%-confidence level

               b)        Regression results for France 1998
                                                                                                                                         Adj. R2
  Indicator              Constant        Trend           May 1998        June 1998      July 1998       August 1998       AR(1)

  Overnight stays        6969445 ***     22686.26***     286799.9        -419412.3      -332718.0       -201594.0         0.676228***    0.955836
  (hotels)               (57.92764)      (19.63276)      (1.148658)      (-1.429022)    (-1.134471)     (-0.808593)       (12.01950)
  Retail sales index     79.39335***     0.259501***     -0.874272       -2.555178      0.296414        -0.179671         0.225155***    0.980535
  (deflated)             (204.0218)      (67.35218)      (-0.531230)     (-1.512997)    (0.175580)      (-0.109339)       (2.783995)
  Unemployment           25.56383        -0.061386       -0.040423       -0.080635      -0.020635       -0.060423         0.994799***    0.995141
  rate                   (0.680108)      (-0.791309)     (-0.522083)     (-0.850307)    (-0.217597)     (-0.780390)       (104.5547)
                                                                                                                                         Adj. R2
  Indicator              Constant        Trend           Q1/1998         Q2/1998        Q3/1998         Q4/1998           AR(1)

  Tourism receipts       5178.813***     87.92485***     -64.79600       -124.3224      -44.10685       16.30871          0.457089***    0.863675
  (million €)            (17.47683)      (9.579082)      (-0.116604)     (-0.202799)    (-0.072001)     (0.029389)        (3.472522)
  Tourism expendi-       2837.686***     68.60980***     -73.01171       -80.99046      -29.94475       -86.47416         0.331987**     0.965424
  ture (million €)       (32.07257)      (24.87503)      (-0.356083)     (-0.372620)    (-0.137902)     (-0.422535)       (2.353270)
  Tourism service        2355.258***     18.15040**      -15.65987       -16.33376      25.25237        133.3074          0.219915       0.126410
  balance (million €)    (10.47393)      (2.584103)      (-0.025639)     (-0.025992)    (0.040226)      (0.218737)        (1.529735)
  Consumption priv.      140840.8***     1238.185***     10.23122       -145.7786       236.7535        678.9966          0.744138***    0.995547
  households. (const.    (62.36192)      (26.02029)      (0.008505)     (-0.100817)     (0.164215)      (0.567793)        (8.101989)
  prices) (million €)
  Employment (in         11561.10***     61.67884***     -0.730096       57.57918       20.79379        -33.92087         0.966722***    0.996366
  thousands)             (8.433907)      (4.074823)      (-0.013966)     (0.898997)     (0.324668)      (-0.648904)       (33.87437)
  Wages (accumu-         110781.6***     1990.530***     -2206.246**     -2598.285**    -1261.056       478.8642          0.892294***    0.998378
  lated) (million €)       (14.73202)       (14.65441)    (-2.151477) (-2.075338) (-1.007274) (0.467001)                    (14.92858)
 t-satistics in parenthese.* = significant on 10%-confidence level, ** = significant on 5%-confidence level, *** = significant on 1%-confidence level
                                                                                                                                                                                         23




                    Tab. A2             Overvie w of econometric studies on economic effects of sport and sport facilities

Study        Region under study     period   Dependent Variable                     Independent variables                                   Result of study
Baade        9 US cities            1965-    Income                                 Population; dummies: new or renovated stadium,          Significant negative or no significant positive effects
(1987)                              1983     Trade turnover                         existence of a football team; existence of a baseball
                                                                                    team
Baade and    9 US cities            1965-    Income                                 Population; dummies: new or renovated stadium,          Effects on income and trade turnover are uncertain, possibly
Dye (1990)                          1983     Trade turnover                         existence of a football team; existence of a baseball   negative.
                                                                                    team
Baim         15 US cities           1958-    Employment service sector              Population; dummies: existence of a football team;      Positive effects of professional sport teams on employment
(1994)                              1984     Employment non-agricultural sector     existence of a baseball team
Baade        48 US cities           1958-    Per capita income                      Number of professional Major League Teams,              No significant effect of stadia and teams on income
(1994)                              1987                                            number of stadia, not older than 10 years
Kang/        Korea (and 4 other     1988-    Tourists arrivals                      Relative prices, event factor                           Olympic Games of Seoul 1988 led t o 1 million additional
Perdue       Asian countries)       1990     Income from tourism                                                                            arrivals and US$ 1.3 billion additional income from tourism
(1994)
Baade        48 US cities           1958-    Per capita income                      Number of professional Major League Teams,              No significant effect of stadia and teams on income and em-
(1996)                              1987     Employment leisure industry (SIC 79)   number of stadia, not older than 10 years               ployment.
                                             Employment sport industry (SIC 794)
Baade and    10 US cities           1958-    Employment leisure industry (SIC 79)   Per capita income; weekly working hours; popula-        No significant effect of stadia and teams.
Sanderson                           1993     Employment sport industry (SIC 794)    tion; number of professional sports teams; number
(1997)                                                                              of new stadia
Coates and   37 US cities           1969-    Per capita income                      Population; income; stadium capacity; dummies           Possible negative effect of stadia and teams on income.
Hum-                                1994                                            Team entries in the last 10 years, team exits in the
phreys                                                                              last 10 years, existence of a team, construction of a
(1999)                                                                              stadium in the last 10 years, single- or multiple-use
                                                                                    stadium
Teigland     Norway/                1991-    Norwegian guest nights                 Retail trade volume; Lagged price index; Final          Significant negative effect of 1992 Olympic Winter Games on
(1999)       Calgary City           1997/    Foreign guest nights in Norway         domestic demand                                         Norwegian guest nights, no effect on foreign guest nights/
                                    1981-    Occupancy rate in Calgary                                                                      No effect of 1988 Olympic Winter Games on accommodation
                                    1993                                                                                                    demand in Calgary
Baade,       75 largest US-         1973-    Growth of employment                   Population; per capita income; nominal wages;           No significant employment effects of Super Bowl matches.
Matheson     cities (1969 / 1997)   1997                                            taxes; Dummy oil boom; Regional dummy, Trend
(2000)                                                                              var.
                                                                                                                                                                                                  24




Coates,      37 US- cities          1969-   Per capita income                                Population; income t-1; nominal wages; taxes; Oil        Possibly negative effect of stadia and teams on income
Humphrey                            1996                                                     boom and bust dummies; regional and yearly dum-
(2000a)                                                                                      mies, trend variable, dummies or entrance/ exit of
                                                                                             team in the last 10 years, for the existence of teams,
                                                                                             for the construction of a new stadium, stadium
                                                                                             capacity, dummy for single- or multiple-use Sta-
                                                                                             dium
Coates,      37 US- cities          1969-   Per capita income                                See Coates, Humphrey (2000a). In addition dum-           Strikes in Major Baseball League und Major Football League
Humphrey                            1996                                                     mies for strikes.                                        did not have significant effects on local income.
(2000b)
Baade,       US-Host cities of      1973-   Employment growth                                Population; Real per capita income; nominal wages;       Job losses in 10 of the 21 cities in the study. Average loss of
Matheson     All Star Game          1997    Taxable sales                                    taxes; Oil boom and bust dummies; regional dum-          approx. 8.000 jobs.
(2001)       (Baseball)                                                                      mies                                                     No significant changes in taxable sales
Baade,       75 largest US-         1969-   Employment growth                                Population; per capita income; nominal wages;            No significant employment effect, neither of the 1984 L.A.
Matheson     cities (1969 / 1997)   1997                                                     taxes; Dummy oil boom; Regional dummy                    Olympic Games nor of the 1996 Olympic Games in Atlanta
(2002)
Coates,      39 US- cities          1969-   Per capita income                                See Coates, Humphrey (2000a). In addition dum-           No significant income effects from the participation in postsea-
Humphrey                            1997                                                     mies for the participation at postseason Games           son games.
(2002)
Szymanski    20 countries in the    1971-   Growth of GDP                                    Previous year‟s growth; dummies for years before,        Significantly lower growth in year of WC
(2002)       world with the         2000                                                     after and during the Olympic Games and the WC
             largest GDP
Coates,      37 US cities           1969-   Wages service sector; wages trade; wages hotel   Population; income; stadium capacity; dummies            Overall negative effect of stadia and teams on wages and
Hum-                                1996    industry; wages entertainment and recreation     team entries over the past 10 years, team exits over     employment.
phreys                                      sector; wages catering sector; employment ser-   the past 10 years, existence of a stadium/arena over
(2003)                                      vice sector; employment trade                    the past 10 years, single- or multiple-use stadium
Hotchkiss,   All counties      in   1985-   Employment                                       Share of 8 sectors                                       Significant positive effect of Olympic Games 1996 on em-
Moore        Georgia, USA           2000    Wages                                            Population                                               ployment in Olympic regions, no significant effect on wages
Zobey
(2003)
Baade,       13 host cities of      1970-   Growth rate                                      Income                                                   Six cities with negative impact. Total loss US-$ 9.26 billion
Matheson     WC 1994                2000                                                     Wages
(2004)                                                                                       Taxes
                                                                                             Oil dummy
Carlinho,    60 largest USA-        1993/   Housing rents                                    Usual Hedonic pricing model variables, Dummy for         Rents are 8 percent higher in central cities with NFL team. No
Coulson      MSAs in 1993/          1999    Wages                                            time-varying city characteristics, Time Dummy            significant effect on wages.
(2004)       1999
TU (2005)    FedEx       Field,     1992-   Prices of 35000 transactions of single-family    Usual Hedonic pricing model                              Aggregate increase of property value of about US$ 42 million
             Washington             2001    Properties in Prince George´s County
Ahlfeldt,    Berlin, “Olympic”      1992-   Standard land values                             Usual Hedonic pricing model                              Aggregate increase of standard land values of up to 8% in an
Maennig      Arenas                 2005                                                                                                              area of some 3 km around the arenas
(2008)
                                                                                                                                                                   25




Jasmand,   652 German     re-   1961-   Regional GDP            Share of agriculture and industry; of trade and           Significant positive income effect of Olympic Games 1972 on
Maennig    gions                1988    Regional employment     Transport; of other services                              Olympic regions, but no significant employment effect.
(2008)                                                          Employment/
                                                                Population
                                                                Dummies for oil price shocks and urbanisation
Hagn,      75 urban districts   1998-   Regional unemployment   Population                                                No significant short-term effect of the WC 2006 on the unem-
Maennig    in Germany           2007                            Dummy for districts in the former East Germany,           ployment in the match venues.
(2008a)                                                         dummies for WC 2006
                                                                Share of agriculture, forestry and fisheries sector; of
                                                                manufacturing industry sector; of trade, hospitality
                                                                industry and traffic sector; of public and private
                                                                service industry sector
Hagn,      75 urban districts   1961-   Regional employment     Population                                                No significant short-term effect and no significant long-term
Maennig    in Germany           1988                            Income share, dummies for oil shocks in 1974 and          effect of the WC 1974 on the employment in the match venues.
(2008b)                                                         1982, dummies for states in the Federal Republic of
                                                                Germany, dummies for WC 1974
                                                                Share of agriculture and manufacturing sector; of
                                                                trade and transport sector
                                                                                                                          No significant effect of the WC 1974 on the employment in
                                1960-                           Lagged employment, real GDP, real wage levels,            Germany as a whole.
                                        Employment              dummies for oil shocks in 1974 and 1982, dummies
                                1990
                                                                for WC 1974
                                                                                           26




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